Run each utility consecutively, and reboot after each program has finished its scan/fixes (just for good measure). Before actually scanning/fixing with each, make sure to use the programs' online update features to make sure you have all of the most current updates installed.

2. Once you've cleaned up as much as possible with the above utilities, run HijackThis again and post a fresh log.

When it completes, post back the full filename of any files that cannot be cleaned or deleted.

Also, I'm pretty new at reading HijackThis logs, but will give it a shot since I'm wanting to learn and be helpful - mostly I'm just seeing some adware/spyware type stuff, possibly a virus, so scanning with the free online scan is first step, then some anti-spyware. You aslo seem to have a lot of toolbars - I know there are "bad" ones out there - not sure how to tell which are which, but Spybot will remove the bad search bars.

The log entries above indicates that you had at least 2 instances of Internet Explorer running when you ran HijackThis. Before fixing problems with HijackThis, you must make sure to close/quit ALL instances of your web browsers.
HijackThis cannot fully perform its fixes while browsers are running.

4. Open an MS-DOS window, type the following command, and then hit Enter. Close the DOS window when the command completes:

regsvr32 /u C:\WINDOWS\SYSTEM\WLDR.DLL

5. Reboot into safe mode (you get to the safe mode boot option by hitting the F8 key as your computer is starting up)

- Open Windows Explorer and:
Select the View menu and then click Folder Options.
After the new window appears select the View tab.
Scroll down until you see the Show all files radio button and select it.
Press the Apply button and then the OK button.

- Locate and delete the following files:C:\WINDOWS\SYSTEM\wlxlcpeq.exeC:\GSIVO.EXEC:\WINDOWS\System\srvc32.exeC:\WINDOWS\System\spoolsrv32.exeC:\WINDOWS\SYSTEM\WLDR.DLL

Does the system seem to be working normally now? If not, give us the details.

If it is working now, here are a few things you can/should do to minimize your chances of future virus/malware infections:

1. Enable Windows Automatic Update function to keep your system as up-to-date as possible with the most current Microsoft security and bug fixes.

2. Stop using Internet Explorer as your web browser. Because IE is so closely tied into the Windows operating system itself and contains so many security flaws, switching to another browser such as Netscape, Firefox, or Opera will greatly reduce the avenues through which spyware/adware/hijackers/etc. can infect your computer.

3. Install preventative utilities such as SpywareBlaster and SpywareGuard (links are in my sig below), especially if you absolutely have to continue using Internet Exploder. These utilities protect areas of your system known to be vulnerable to malicious attacks.

4. Tighten up some of Internet Explorer's existing, default settings to make it more secure. Some info on that can be found here: http://tomcoyote.org/ieoe.php

5. Obviously-install a good anti-virus program and enable its "auto-protect" and email-scanning features.

6. Install a stand-alone firewall program such as Zone Alarm or Kerio Personal Firewall, or purchase the "Internet Security" packages offered by Symantec and McAfee.

7. None of your utilities are of much good if you don't check for updates frequently; updates for anti-spyware/anti-virus programs can be released as often as ever two or three days.

I'd personally recommend a fresh, clean install of XP as opposed to an upgrade over 98, but if an upgrade is your only option (and you're positive the system is trouble-free now), you should be able to go for it. Just make sure you back up any critical data before upgrading! If something goes wrong with the upgrade, you could be left not even being able to boot into 98 anymore.